Still room for community banks

In a modern market dominated by financial giants, community banks say there's still room for the kind of old-fashioned service that generations of their customers have come to expect.

With big banks getting bigger, smaller institutions promote a person-to-person style that has earned them customer confidence and loyalty despite a changing market where competition is keen.

"In the old days, things were done on a handshake," said Mark Luderman, president of Bank of Holland. "Those days are gone, but one thing we feel we can do is know our customers, recognize them by name. The market is shifting, but there still is a segment out there that likes the personal recognition when they come in. You know something about their history and you treat them like a person."

The rural Bank of Holland, established in 1893, operates a single branch but plans to extend its market by opening a second office in East Aurora, he said.

"The niche we fill is a more personalized relationship, one-on-one service, low (employee) turnover," Luderman said. "You see the same faces every day.

You build up a relationship and hopefully that will mean something. We feel there is room. We have been successful so far and don't see any reason why we can't continue to be successful with that approach going forward."

One traffic light

Four out of the five branches of Cattaraugus County Bank, meanwhile, are located in small towns that have a single traffic light, according to President and CEO Salvatore Marranca. With total assets of $120 million and a 100-year history, it's not a "sleepy, little country bank," he said, but it does boast a down-home philosophy that customers appreciate.

"We have the technology here. We give you the products you want, but we balance that with true personal service," Marranca said. "When the second largest bank in the world says, 'We're your neighborhood bank,' I'm sorry, you can't be both. We can't be a worldwide bank and they can't be a true neighborhood bank. It just doesn't work that way."

Spend some time in his bank any day of the week and you will get a true sense of how it compares to today's "megabanks," he said.

"People say personal service is gone. Well, it's not gone at our bank," Marranca said. "They say you can't get the personal touch anymore. Not true. We know our customers' names. We have long-term employees. Community banking really is a mindset. It's a culture. You don't just punch the clock. It's a unique industry that we have here."

"We beat the pants off of the industry statistics when it comes to profits and loan quality," Marranca said. "Our customers are loyal to us because we're loyal to them. Our loan growth in the last two years alone is averaging 10 percent annually. Our assets are up a solid 5 percent over last year. Is there a place for us? Yes!"

Deep roots

There are an estimated 4,500 community banks nationwide, according to Gary Teagno, senior vice president of the Independent Community Bankers Association, based in Washington D.C. He said the majority of them have deep community roots and pride themselves on lending practices that offer flexibility not typically found at larger competitors, particularly when it comes to small-business loans. They occupy a niche in modern markets but manage to offer customers a diverse array of financial products that keep them competitive with the industry "big boys," Teagno said.

"They become known in a community for satisfying consumer needs. They tend to be quite agile, more flexible. They keep their roots within a community," he said.

"Often, the larger banks are owned by (companies) that may have their primary headquarters in a different state. A lot of the decisions in those banks tend to be driven by the home office rather than made on a local basis. For a local businessman – rather than having his loan determined by a local banker who knows the area, knows the economy and what's going on – maybe his loan ends up being made simply on the basis of a credit score by a bank two states away. I think that's a critical aspect."

Relationship-building among its small-business and retail consumer base is a priority at First Tier Bank & Trust, formerly known as Salamanca Trust Co.

Randolph Brown, president and CEO, said the bank was started in 1881 and currently has offices in Olean, Allegany, Salamanca, Ellicottville and Cuba, N.Y.

"We work hard at our relationships with customers," Brown said. "We don't view ourself as a transaction-oriented bank. There are some banks out there that try to make their money on every single product or service. Some that we offer, frankly, we don't make any money on. But we think it is important for our customers to have access to these products."

Added Brown: "If you look at our numbers, they speak for themselves. We have had substantial growth in the last five (to) seven years."

Community bankers think alike, said James Tilley, president and CEO of Evans National Bank.

"I know how I like to be treated," he said. "If you are called by name and feel welcome and are listened to, if your request is considered and you get quick and honest feedback, that's important to us. We work hard at that personal service and attention. We think we provide very competitive products and pricing. We think we can make the difference in terms of customer service and relationships. That's really the key to our success."